Here’s a simple question:
What do you do when important equipment breaks down?
It’s a simple question but answering it requires some thought. From complex machines with many moving parts to a single lightbulb: you’ll want a strategy for repairing or replacing something when it breaks. If your equipment suffers downtime, that’s lost opportunities and revenue. This is where asset management comes in. According to the official ISO 55000 standard for asset management, the definition of Asset Management is “the coordinated activity of an organisation to realise value from items, things or entities that have potential or actual value to an organisation.” Or, shorter: Asset Management is making strategic use of the things that make you money! Whether that’s IT equipment, vehicles, heavy industrial machinery or buildings. You can apply the principles of Asset Management to any industry, from IT to Financial and Infrastructure.
Asset Management allows you insight into your assets’ full lifecycles. Setting up a system for Asset Management will allow for more streamlined maintenance processes, lower costs and less downtime. In this article, we’ll take a deep dive into the subject and take you through the basics. At the end, you’ll be ready to climb to the top of the Asset Management game.
What is the difference between maintenance management and Asset Management?
You may have already heard of the term CMMS (Computerized Mainenance Management System). These are software packages designed to optimise maintenance processes. In other words: they help you plan for your asset health. So what exactly is the difference between Asset Management and maintenance management?
Maintenance management is one part of Asset Management. Maintenance management is about maintenance scheduling, labor planning and parts inventory. Asset Management focuses on the full asset lifecycle. Maintenance is just one part of that. The full lifecycle includes purchasing, leasing/maintenance contracts, Health-Safety-Environmental (HSE) regulations and eventual disposal/recycling of the asset. A lot more than keeping it running!
As you can see, maintenance management and Asset Management are closely related. Asset Management takes it a step further than taking care of maintenance planning.
Who’s Asset Management for?
Companies that will benefit most from a strong Asset Management strategy, are companies that own a lot of expensive property (machines, vehicles, buildings etc.). Transportation, energy and manufacturing/production are some examples.
That said, any company can apply the principles of Asset Management to improve asset lifecycles. Think about the equipment you use on a daily basis. Then consider the cost implications if it breaks down or needs maintenance. How long should an asset last? How much would its downtime affect your core business? These questions will inform what level of asset management is appropriate for you.
What are the 5 stages of Asset Management Maturity?
There’s a model outlining the different stages of Asset Management within a business. You can use this Asset Management Maturity Model (AMMM) to see how you’re doing. There are some variations of this model with differing terminology. The most important thing is being able to have an idea about where you are and what steps to take. The most used model uses five different stages: Chaotic, Initial, Developing, Managed and Optimised. We’ll go through these phases below.
If your answer to the question at the start of this article was “I don’t know”, you’re very likely in the Chaotic phase of the AMMM. You own some important assets that you need for your primary business process. You mostly hope they won’t run into trouble, as they’re expensive and/or time-consuming to repair or replace. But you haven’t really though about how to account for time and resources in the case it does happen. You’re not aware of the concept of Asset Management and are not tracking asset health or performing scheduled inspections. Any work performed on assets is ad-hoc. You keep no records or registration of your assets and their health. You do not keep a record of any maintainenance, repairs or replacements.
You have a clear idea about what Asset Management is and how it could benefit your organisation. You’re devising a strategy to keep track of your assets and their condition. You’ll be thinking ahead and making sure you have the necessary expertise on hand or at least on speed-dial. You keep a stock of spare parts, so your assets are out of order as short a time as possible. You may or may not have a periodical inspection plan for your critical assets. Bottom line: if you’re starting to keep track of your asset information, you’ve made a great start.
You have a system for keeping consistent records on inspections and asset health. You’re also taking it a step further and use financial information about your asset costs. Furthermore, you have a very clear idea of your asset lifecycles. You combine all this information to inform the best Return on Investment for your assets. You know where and when to perform maintenance, repairs and replacements. You’re confident in your decision-making due to the data available to you. You’re moving from an ad-hoc, reactionary approach to preventive maintenance. This further minimizes your asset downtime and increases productivity.
You’re keeping awesome track of your asset information. Furthermore, you have further improved your approach to asset maintenance. You are aware of asset opportunities and risks. With the information at your disposal, you’re moving beyond planned maintenance. Monitoring asset health and optimal Return on Investment both inform your maintenance planning. Instead of a set schedule, planned maintenance has become predictive maintenance. You’re managing your asset health in a smart and financially sound way.
You’ve perfected the predictive nature of your asset management strategy. Managing asset health through automated sensors and procedures is a continuous process. Asset Management has become an integrated part of your day-to-day operations. It informs how you spend your resources, maximising your Return on Investment. You’re working with clear, identified KPIs for you assets, like production, run hours, costs etc. You bring resource waste to a minimum when maintaining, repairing and replacing your assets.
How to start with Asset Management?
If Asset Management sounds like something you’d like to apply, you can follow the steps below to implement it.
Take stock of your business processes, machinery and applicable warranty/rental contracts
Before you dive into picking an Asset Management strategy and software package, you’ll want to know what assets you’re managing. Consider your business’ current structure, processes and KPIs. What equipment and machinery is essential for your core business and attaining your goals? Do you have warranty and/or maintenance contracts for these machines? Determine your business goals. Then take stock of any high-risk assets that influence these goals the most.
Prioritise your assets and procedures
You’ll want to make in informed decision about where your initial focus will be when you start performing Asset Management. As a business you’ll want an optimal return on investment. In your primary business process, some procedures and equipment will be more important than others. You’ll want to invest in these critical assets before anything else.
Determine your initial investment in asset management
The first step is taking stock of your most important procedures and assets and prioritise them. After you’ve done that, you’ll want to determine the amount of time and money you will invest in starting your asset management strategy. Depending on the complexity of your business process and assets, you can decide to set up basic maintenance scheduling for your most essential assets or take the time, effort and money to enter the contracts and full lifecycles of every nut and bolt in your company. You’ll know what works best for you!
Choose an Asset Management system
Once you’ve made some choices about what, how and how much you’re willing to invest in Asset Management, you’ll want to choose a software package to complement your strategy. There’s a whole lot of Asset Management programs out there. Some of them focus on specific industries and some have stronger maintenance or finance modules. Which one you choose is fully dependent on the previous steps and your business goals. Listing them all would be an impossible task, but know that there are many different options and there’s bound to be a system that works for you.
Implement your chosen solution and train key users
No matter the solution you choose, the next step is to take steps one and two from before and implement them in your chosen system. This will be the basis for your entire Asset Management strategy. As important as identifying your critical assets and choosing the right software package to complement your strategy, is training the people in your organisation that will work with the software. After all, if they are going to be the ones working with the system, they should know how it works and how to properly enter information. Keep in mind that the success of implementation is highly dependent on the adoption of the system by these key users (managers, team leads etc.).
Use data smartly and keep improving!
Now that you’ve set everything up and have taken your first steps on the Asset Management-journey, your aim should be to continually improve and optimise the Asset Management process. Luckily, most Asset Management software packages offer reporting capabilities. This allows for monthly, weekly or even daily reports on a wide range of metrics. By running and analysing reports, you’ll be able to see what goes well and where there’s room for improvement in the Asset Management process. Using reports well is crucial to climbing the ladder of the Asset Management Maturity Model.